History Before Workers Compensation Before the creation of workers compensation laws, employees injured on the job had to prove that the employer’s negligence caused the injury. Even if negligent, the employer could usually invoke the following defenses: Fellow Servant Rule Negligence that was caused by a fellow employee Contributory Negligence If the injured employee was even partially responsible, claim was denied Assumption of Risk This asserted that the employee knew in advance of the risks of the job and assumed these risks Workers Compensation – Definition Definition on an Accepted Workers Compensation Claim A system whereby an employer must pay, or provide insurance to pay, the lost wages and medical expenses of an employee who is injured on the job. Occupational disease is also included. Injury must arise out of and in the course of employment. Types of Claims: Medical OnlyLost Time

Workers Compensation Fundamentals No Fault Regulated by state statutes – Benefits Included Primary Coverage Exclusive Remedy Mandated if you have 4 or more employees Does not cover pain and suffering Has its own judicial system Single commissioner Full commission Has its own industry organization NCCI ~ National Council on Compensation Insurance – gathers data, analyzes trends, prepares rates and loss cost recommendations, conducts audits on residual market carriers Residual Market – “The Pool” Guaranty Fund

Types of Employees – Who Is Covered Case law defines the fundamental test of employment as the right of the employer to control the employee’s work. The right and authority to hire or to fire. Full Time Employee Covered Part Time Employee Covered Casual Not covered unless the job performed is within the scope of the usual business performed by the employer. Not a permanent employee. Volunteers No organizations can obtain coverage for volunteers if they want it Sole Proprietors and Partners automatically excluded but can apply for inclusion Exceptions Federal employees, railroads, state and county fair association, agricultural employees, owner-operator drivers, certain commission paid real estate agents

Benefits Provided Under Workers Compensation Lost Wages Paid on the basis of sixty-six and two-thirds per cent (66 2/3%) of the worker’s average weekly wage. These payments are subject to a time deductible. Medical Care Begins immediately after the claim is accepted Permanent Disability Disfigurement Death

Explanation of Time Deductible for Wage Benefit Purposes Consecutive Days Missed From Work 8 days = 1 day of pay 9 days = 2 days of pay 10 days = 3 days of pay 11 days = 4 days of pay 12 days = 5 days of pay 13 days = 6 days of pay 14 days = 7 days of pay 15 days = 15 days of pay 16 days = 16 days of pay Etc. 1 day = 0 2 days = 0 3 days = 0 4 days = 0 5 days = 0 6 days = 0 7 days = 0 Remember: Medical benefits begin immediately and are unlimited

Premium Drivers Number of Employees Total Wages Types of Jobs or Classifications (Risk) Claims History Frequency versus severity Experience Modification Factor “Mod” Your experience modification factor compares your workers compensation claims experiences against employers of similar size operating in the same type business. Your MOD is calculated based on the previous three years of available experience. The MOD compares your specific payrolls and losses to the industry average losses for like businesses of similar size. Industry Average = 1.00 mod If your experience is 20% better =.80 If your experience is 20% worse = 1.20

If your policy is placed in the residual market or pool, an assigned risk adjustment program (ARAP) factor will be applied. Premium Drivers (continued) Fraud Premium Fraud Number of Locations Legal Expense EMODs are usually shown on the declarations page of a workers compensation policy. MODs may not be available on very small businesses. Depends on the particular state.

What To Look For When Buying A Workers Compensation Policy An aggressive claims department  adjusting versus processing  24 hour contact rule  150 case limitations An active subrogation / recovery department An effective managed care program  Nurse Case Managers  Return To Work Program  Medical Bill Re-Pricing System  Independent Medical Exam Loss Control or Risk Management The insurance company has the right to perform risk control inspections and make recommendations on safety Premium Audits The insurance company has the right to perform premium audits to verify payroll and classes of employees

What To Look For When Buying A Workers Compensation Policy continued AM Best Rating Issues financial strength ratings and ability to pay claims for insurance companies Credits For:  Safety Program  Drug Testing Programs  Loss Ratio Incentive Programs Large Deductible Programs

Most Dangerous Jobs In America Deaths per 100,000 workers Fishermen116 / 100,000 Loggers92 / 100,000 Airplane Pilots71 / 100,000 Farmers & Ranchers41 / 100,000 Mining Machine Operators39 / 100,000 Roofers32 / 100,000 Sanitation Workers30 / 100,000 Truck Driver & Deliverymen22 / 100,000 Industrial Machine Repairmen20 / 100,000 Police Officers18 / 100,000